China Aims to Further Promote Private Investment

China has decided to allow private investment in a new range of industries, which are controlled by state-owned enterprises.

Economists believe this policy indicates the government's intention of granting private enterprises a larger role in achieving sustainable growth.

Citing past experience, they call for coordinated measures to ensure the success of the new policy.

China's State Council, or cabinet, has released a set of guidelines pledging to "enlarge the scope of private investment".

Now, private investment can enter a wide range of industries, including infrastructure construction, oil, mining and public services.

Yuan Gangming, an economics researcher with the Chinese Academy of Social Sciences, applauds the move.

"I think the government aims to achieve a sustained economic recovery by relaxing restrictions on private investment. It's also a signal that the government intends to promote the private sector as a pillar of the Chinese economy."

Cao Heping, a professor from Peking University, says the development of private enterprises is critical to the adjustment of the Chinese economy.

"The key to China's economic adjustment is figuring out how to boost domestic demand. Compared with state-owned companies,

private enterprises are more sensitive to the needs of the market and more efficient in terms of producing consumer-oriented products. Thus, the entry of private investment into new industries can substantially boost domestic demand."

Chen Zhao, an economist from Fudan University, argues that the central government's policy on its own is not enough to boost the development of private enterprises.

"The success of the policy depends on the implementation of other facilitated measures, such as industrial polices at a local level. At present, it's very difficult for private enterprises to get loans from the state-owned commercial banks. So, special development banks should also be established to shore up the private enterprises."

The central government issued a similar set of guidelines in 2005, merely outlining the sectors that private enterprises are allowed to enter.

Experts claim the enforcement of the 2005 guidelines was unsatisfactory due to a lack of coordination and few details on how to implement them.